Do you already own a property in Luxembourg and plan to buy a new one? A bridge loan can help finance your new purchase before the sale of your current home. Here’s everything you need to know.
🔍 What is a bridge loan?
A bridge loan is a short-term loan granted by a bank to help a homeowner finance the purchase of a new property before selling their current one.
The bank advances part of the net value of the property for sale (property value - remaining loan), usually between 60% and 80%, to supplement the down payment for the new purchase.
This loan is repaid in one lump sum once the original property is sold.
🧾 Practical example with an existing mortgage
- You own a flat valued at €800,000
- You still owe €200,000 on that mortgage
- You want to buy a new house for €1,200,000
- The bank retains 80% of the net value:
- → €800,000 - €200,000 = €600,000 (net value)
- → 80% of €600,000 = €480,000 bridge loan
- Financing the new house:
- → Bridge loan: €480,000
- → New mortgage: €720,000
- → Total: €1,200,000
The bridge loan is repaid once the flat is sold. The remaining €200,000 on the old mortgage is also paid off at that time.
📋 Granting conditions in Luxembourg
- Property must be officially for sale (listing or signed mandate)
- Valuation of current property by a real estate agent or expert
- Existing mortgage known and factored in
- Sufficient borrowing capacity, even temporarily
- Short duration: ideally 6 to 12 months
🗓️ Duration and interest
- Term: 6 to 12 months, renewable depending on the bank
- Interest rate: usually slightly higher than a standard mortgage
- Full or partial deferral possible (interest only or capital + interest at maturity)
⚠️ Important points
- The loan is based on the net value (value – remaining debt)
- If the sale is delayed, you may need to service both loans
- Some banks require a resale clause within a defined period
- If the property isn’t sold, the bridge loan must be converted or refinanced
✅ Why choose MORTGAGE.LU?
Our experts guide you every step of the way:
- Analysis of your current situation and project
- Coordination between existing and new loans
- Negotiation of deferrals, rates, and terms
- Support in case of slow or partial sale
🧹 Conclusion
A bridge loan lets you seize an opportunity to buy, without waiting to sell. But it requires careful planning and solid structuring. At MORTGAGE.LU, we help you build a secure and optimized financing plan.
